Memorial for the Respondent

C88

Dr. Ram Manohar Lohia National Law University

Concours 2018

Before the Hon’ble High Court of Nawabdwip

In the case of

Modern Infrastructure Private Limited……………………………………… Petitioner

Versus

Government of Hind Pradesh……………………………………....................Respondent

AND

Clive Lloyd Construction Private Limited…………………….……………….Petitioner

Versus

Government of Hind Pradesh………………………………………………....Respondent

Under ARTICLE 226 OF THE Constitution of Samudrasthal

On behalf of the Government of Hind Pradesh

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Memorial for the Respondent

Contents
List of Abbreviations ...................................................................................................................... 3
Index of Authorities ........................................................................................................................ 4
Statement of Jurisdiction................................................................................................................. 5
Statement of facts ............................................................................................................................ 6
Issues raised .................................................................................................................................... 8
Summary of Arguments .................................................................................................................. 9
Arguments Advanced.................................................................................................................... 10
1. The action of GHP not awarding the contract to MIPL is totally valid under ................... 10
2. The decision of Hon’ble district court of Nawabdwip to dismiss any............................... 13
3. Hon’ble District Courts decision in decreeing a sum of INR ............................................ 15
4. The action of GHP of blacklisting CLCPL from further government ............................... 18
Prayer ............................................................................................................................................ 21

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List of Abbreviations
1. V. ………………………………………………………………...……………..Versus
2. Ltd. …………………………………………………...…………………………Limited
3. Pvt………………………………………………….……………………………Private
4. CM……………………………………………………………………………….Chief
Minister
5. GHP……………………………………………………………………………..Governme
nt of Hind Pradesh
6. SSHMC…………………………………….……………………………………Super-
Specialty Hospital and Medical Care
7. CPC ……………………………………...………………………………………Civil
Procedure Code
8. IDC…………………………………………………………...…………………..Indian
Contract Act
9. MIPL…………………………………………………...…………………………Modern
Infrastructure Private Limited
10. CLCPL………………………………………………………………...…………..Clive
Lloyd Construction Private Limited
11. DAS………………………………………………………………………………...
Development Agenda of Samudrasthal
12. PPS …………………………………………………………………………………
People’s Party of Samudrasthal

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Index of Authorities
1. Air India Ltd. V. Coachin International Airport Ltd…………………………...………10
2. Food Corporation of India V. Kamdhenu Cattle Feed Industries……………...……….10
3. Cama Hotels V. Union of India……………………………………………………...…..10
4. Association of Registration Plates V. Union of India………………...……………...….10
5. N.Kunshiraman V. State of Kerala and others………………………………………….11
6. Union of India and ors. V. Hindustan Development Cooperation and ors….…..……....11
7. Maa Binda Express Carrier V. North east Frontier………………………...…………….11
8. Kedia Silk Mills Private Limited V. State of Andra Pradesh…………………………..12
9. LIC v. Consumer Education and Research Centre…………………………………...….12
10. M/S. Kanchan India Limited Rep V. State of A.P……………………………………….12
11. A.B.C Laminart and Ors. V. Agencies of A.P…………………………………………..13
12. Jagdish Singh V. Natthu Singh…………………………………………………………..15
13. Hadley V.
Baxendale……………………………………….....……………………………………..15
14. Victoria Laundry (Windsor) Ltd V. Newman Industries Ltd………………………...….16
15. M/S Citadel Fine Pharmaceuticals V. M/S Ramaniyam Real Estates Pvt. Ltd. and
Ors………………………………………………………………………………………..17
16. General Manager, Northern Railway and another V. Sarvesh Chopra………….....…17
17. China Cotton Exporters V. Beharilal Ramcharan Cotton Mills Ltd……………………..17
18. Erusian Equipment & Chemicals Ltd. V. State of West Bengal and ors………………..18
19. of Haldia Bulk Terminal Private limited V. Board of Trustees for the Port of
Kolkata…………………………………………………………………………………..18
20. Kulja Industries Limited V. Chief Gen. Manager W.T. Proj. BSNL and
Ors……………………………………………………………………………………….18
21. C. K. Achuthan V. The State of Kerala And Others……………………………………19
22. State of Assam V. Tulsi
Singh……………………………………………………………………………..………19
23. The Union of India (UOI) V. A.K. Mathiborwala……………………………………19
24. Avinash Em Projects Pvt. Ltd. V. Gail (India) Ltd………………………………………19

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Statement of Jurisdiction
The Hon’ble High Court of Nawabdwip may exercise its jurisdiction under Article 226 of
Constitution of Samudrasthal which empowers the court to issue directions or orders or writs,
including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and
certiorari, whichever may be appropriate, for the enforcement of any of the rights conferred by
Part III of the Constitution of Samudrasthal.

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Statement of facts
1. Union of Samudrasthal was a sovereign country situated in south east of Asia. Hind
Pradesh was a state within Samudrasthal and faced lack of proper healthcare.
2. People’s Party of Samudrasthal (PPS) won the elections to the state legislature of Hind
Pradesh and its leader Mr. Saurabh Sharma was elected as the Chief Minister. Mr.
Sharma was keen for providing better health care services and thus immediately after
forming the government stated to deliver on its promises.
3. He floated the idea of a ‘Super-Specialty hospital & Medical College’ (SSHMC) in
Samudrasthal’s capital Nawabdwip. Mr. Debasish Agarwal, Secretary, Family welfare
and health Department, Hind Pradesh, was delegated the task for initiating the process.
4. A tender was released but due to some problems nobody replied to the tender. Another
tender was released and this time the Government received four proposals. All four
proposers possessed the requisite technical qualifications and qualified for the financial
round. Modern Infrastructure Private Ltd. (MIPL)’s financial quotations were found to
be L1 but the contract to build the hospital was given to Clive Lloyd Construction Private
Ltd. (CLCPL). Apparently one of CLCPL’s promoters Mr.Nirav Kodi was the brother in
law of the Chief Minister.
5. A contract was drawn up on October 24, 2012 between the Government of Hind Pradesh
(GHP) and CLCPL for the construction of SSHMC and the final date of possession was
set as June 15, 2015, for a total cost of INR 5,60,00,000.
6. CLCPL stated its work but was faced with lots of problems. 1st a group of people who
lived at the construction site (SITE) was not ready to leave the place. They claimed that
they were legally living there. The police anyhow evicted those people but they filed a
case in the Court of Judicial Magistrate, Lucknow. Also the Municipal Cooperation
didn’t reply to the letter asking for permission for construction and it was only after the
intervention of the CM after the request of Mr. Kirav Modi that the Municipal
Cooperation replied and allowed the construction.
7. After the Judicial Magistrate declared that the people living there were in fact living
illegally, the work finally started. This time CLCPL faced new problems. The cranes
required for demolition of the structure at the SITE could not be made available due to
their shortage. Then there were some changes required by Mr. Debasish Agarwal which

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also took time. Then the workers at CLCPL revolted due to poor salaries and only stated
working after their payment was increased. The work continued slowly and CLCPL had
to ask for 2 deadline extensions and the final date for handing over the possession was set
26 January, 2017.
8. Fresh elections took place and new party Development Agenda of Samudrasthal (DAS)
was elected to power. Till this time CLCPL ad only completed 70% of the work, and
when asked for another deadline, it was met with termination of the contract.
9. Another company was given the tender for building SSMC. GHP filed a case against
CLCPL for the losses occurred to it and also blacklisted the company from any further
contracts with GHP. CLCPL filed an appeal in the High Court of Nawabdwip questioning
the jurisdiction of the court. MIPL also filed a case in the High Court alleging that the
action of awarding the contract to CLCPL was arbitrary, unreasonable and colored with
bias.

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Issues raised
1. Is the action of Government of Hind Pradesh of not awarding the contract to
Modern Infrastructure Private Limited valid under law?
2. How fatal, if it was, was the district court’s decision to dismiss any objection to
the jurisdiction of the Court?
3. Was the District Court right in decreeing a sum of INR 6,00,00,000(Rupees Six
Crores Only) in favor of the Government of Hind Pradesh in light of the facts and
circumstances of the case?
4. Is the action of Government of Hind Pradesh of blacklisting Clive Lloyd
Construction Private Limited from further government works valid under the law?

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Summary of Arguments
1. It is up to the government to form a contract with someone: no one can force the
government to enter in to a contract it does not want to enter into. It is up to the
government to choose who is the best and not the lowest bidder. The government has to
keep in mind the benefit of the public and who will benefit the government the most.
2. It has been given in the sections of Civil Procedure Code in whose jurisdiction
certain cases should be held: Section 20 (C) and Section 16 of CPC provide that the
cases should be held in the jurisdiction of those courts in whose jurisdiction the cause of
action has risen.
3. In the lights of the facts and circumstances the Court’s decision to give 6,00,00,000 is
just: if we keep in mind the loss of public money and the delay in handing over the
possession of the incomplete SSHMC and the loss due to the seats provided by SSHMC
for two years the compensation awarded by the Court is just and in light of the facts of
the situation.
4. The Government can blacklist whoever it feels like has done wrong to public money:
blacklisting is just a form of punishment in which the government decides not to enter
into a contract with a particular company keeping in mind the mistakes done by the
following company and to save the Government from entering into further contracts with
that company.

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Arguments Advanced

1. The action of GHP not awarding the contract to MIPL is totally valid under
the law

A. It is up to the government to decide with whom it wants to enter in a contract with:

in the following case the government used its power to decide with which specific
company it want to enter into a contract with. No one can force the government to enter
into a contract with a company just because it is the lowest bidder. It was held in Air
India Ltd. V. Coachin International Airport Ltd1. that the State can choose its own
method to arrive at a decision. It can fix its own terms of invitation to tender and that is
not open to judicial scrutiny. It can enter into negotiations before finally deciding to
accept one of the offers made to it. Price need not always be the sole criterion for
awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender
conditions permit such a relaxation. It may not accept the offer even though it happens to
be the highest or the lowest. Observations made in paragraph 10 in the decision of Food
Corporation of India V. Kamdhenu Cattle Feed Industries2 judgment are pertinent to
mention. It is clearly stated that even the highest tenderer can claim no right to have his
tender accepted, there being a power while inviting tenders to reject all the tenders.
Though this case talks about the highest bidder the point to be noted here is that the
Government has the full authority to decide with whom it wants to enter into a contract
with. Cama Hotels V. Union of India3 is one the important cases which also took into
consideration the above cases and reiterated that there is no doubt in the fact that it is
very much up to the person inviting the tenders to accept or reject it and no one can force
the invitee to accept a specific tender just because it is the lowest. In Association of
Registration Plates V. Union of India4, the Apex Court held: “.Article 14 of the
Constitution prohibits government from arbitrarily choosing a contractor at its will and
pleasure. It has to act reasonably, fairly and in public interest in awarding contracts. At

1
Air India Ltd v Coachin International Airport Ltd [2000] 2 SCC 617.
2
Food Corporation of India v Kamdhenu Cattle Feed Industries [1999] SCC Bom 55.
3
Cama Hotels v Union of India [2004] SCC Guj 40.
4
Association of Registration Plates v Union of India [2004] 5 SCC 364.

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the same time, no person can claim a fundamental right to carry in business with the
government. All that he can claim is that in competing for the contract, he should not be
unfairly treated and discriminated, to the detriment of public interest.” Time and again it
has been decide by the courts that Government can decide with whom it wants to enter
into a contract and reject anyone if the following company it not suitable to be entered
into a contract with. N.Kunshiraman V. State of Kerala and others5, a case with similar
facts to the present one observed Acceptance of a tender for a higher amount, ipso facto,
does not make acceptance illegal. If there are valid reasons for departing from the normal
rule of accepting the lowest tender. It must be considered whether there are such reasons,
justifying departure.” In view of the conditions in the tender notice, validity whereof was
not questioned, the Government had the right to either accept or reject the lowest offer.”
Such was held in Union of India and ors. V. Hindustan Development Cooperation and
ors6. A bidder cannot insist that his bid should be accepted concluding from the above
judgments we can say that one cannot force the government to enter into a contract with
anyone. A bidder just cannot insist the government that his bid should be accepted. The
following was held in Maa Binda Express Carrier V. North east Frontier 7- The bidders,
participating in the tender process, cannot insist that their tenders should be accepted
simply because a given tender is the lowest for execution of the works of the
Government. All that the participating bidders are entitled to is a fair, equal and non-
discriminatory treatment in the matter of evaluation of their tenders.

B. Larger public interest : it was very clearly given in clause 3 of the advertisement
inviting tenders that the net worth of the proposer for the last three financial years namely
, 2009-10, 2010-11 and 2011-12 should be more than INR 50,00,000 (Rupees Fifty
Lakhs Only) and even though the years were moved back by one year it does not mean
that a contract should be given to a company whose financial status has fallen down to
20,00,000, thus increasing the risk of giving contract to a inefficient company. Before
awarding the contract the government has to keep public benefit in mind and after
looking at the financial status of the company, GHP decided to go for the best option

5
N Kunshiraman v State of Kerala and others [1986] 4 SCC 632.
6
Union of India and ors v Hindustan Development Cooperation and ors [1994] AIR 988.
7
Maa Binda Express Carrier V. North east Frontier [2014] 3 SCC 760.

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available to them rather than going for the cheapest option. “A mere difference in the
prices offered by the tenderers may or may not be decisive in deciding whether any
public interest is involved necessitating intervention in such a commercial transaction. . A
contract need not be given to the lowest tenderer, and the employer is the best judge
thereof as it is, ordinarily, within its domain.” Such was held in M/s. Kedia Silk Mills
Private Limited V. State of Andhra Pradesh8. The main contention here is that the
Government decided to select the best company to give the contract and not a company
which may be financially unstable and thus a threat to public money. Relying on the
judgment of LIC v. Consumer Education and Research Centre9 “On a challenge to the
award of a contract or rejection of a tender, by a public authority or the State, the court
must be satisfied that there is some element of public interest involved in entertaining
such a petition. The elements of public interest are (1) public money would be expended
for the purposes of the contract; (2) the goods or services which are being commissioned
could be for a public purpose; (3) the public would be directly interested in the timely
fulfillment of the contract so that the services become available to the public
expeditiously; and (4) the public would also be interested in the quality of the work
undertaken or goods supplied by the tenderer.” In the present case public money is being
used to construct the super-specialty hospital and the services which are being
commissioned will directly benefit the public and its timely fulfillment is important as the
hospital will provide 300 MBBS seats which are important for the improvement of health
care in the country. The case of M/S. Kanchan India Limited Rep V. State of A.P10.
Commissioner summarizes the above given arguments as the mere fact that they were
the lowest tenderer does not entitle them to claim that the subject work should be
awarded to them. While the Government cannot give a contract for a consideration higher
than that can be obtained for it unless, of course, there are other considerations which
render it reasonable and in public interest to do so. Therefore keeping public benefit in
mind the decision of GHP is correct.

8
Kedia Silk Mills Private Limited v State of Andhra Pradesh [1990] 3 SCC 280.
9
LIC v. Consumer Education and Research Centre [1995] AIR 1811.
10
Kanchan India Limited Rep v State of AP Commissioner [2014] SCC Hyd 542 .

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2. The decision of Hon’ble district court of Nawabdwip to dismiss any objection

to the jurisdiction of the Court is valid under law:

From the very starting everything took place in Nawabdwip. From inviting of tenders to
construction of SSHMC, everything happened in Nawabdwip. Civil Courts derive their power
from Section 9 of Civil Procedure Court and Section 20 of the same CPC says that Under section
20(c) of the Code of Civil Procedure subject to the limitation stated therefore, every suit shall be
instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in
part arises. It may be remembered that earlier section 7 of Act of 1888 added Explanation III as
under: "Explanation III--In suits arising out of contract the cause of action arises within the
meaning of this section at any of the following places, namely:

A. The place where the contract was made;

B. The place where the contract was to be performed or performance thereof
completed;
C. The place where in performance of the contract any money to which the suit
relates was expressly or impliedly payable."

The performance of a contract is part of cause of action and a suit in respect of the breach can
always be filed at the place where the contract should have performed or its performance
completed. If the contract is to be performed at the place where it is made, the suit on the
contract is to be filed there and nowhere else. The following was held in A.B.C Laminart and
Ors. V. Agencies of A.P11. Everything related to the contract happened in Nawabdwip, and it is
the right of the Government to reach the Court if it has suffered losses, then why should the
Government file a case in the Courts of Farashdanga. If the district court of Nawabdwip has the
competence to judge such a case then why should it be out of its jurisdiction when the whole
matter has arisen in the territory of Nawabdwip?

Further if we look at Section 16 of CPC which talks about damages related to non-movable
property it says : "Suits to be instituted where subject matter situate: Subject to the pecuniary and
11
ABC Laminart and Ors v Agencies of A P [1989] AIR 1239.

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other limitations prescribed by any law, suits-

(a) For the recovery of immovable property with or without rent or profits.
(b) For the partition of immovable property.
(c) For the foreclosure, sale or redemption in the case of a mortgage of or charge upon
immovable property.
(d) For the determination of any other right to or interest in immovable property.
(e) For compensation for wrong to immovable property.
(f) For the recovery of immovable property actually under distraint or attachment,

shall be instituted in the Court within the local limits of whose jurisdiction the property is situate.
SSHMC being an immovable property and if we need to claim compensation for wrong to an
immovable property keeping sub-section (e) in mind, the case shall be instituted within the local
limits of the immovable property that is Nawabdwip.

Law is above the agreement between parties. It is clearly stated above that parties can file a case
in a court which has the jurisdiction to hear the case then why should the Government not do so.

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3. Hon’ble District Courts decision in decreeing a sum of INR

6,00,00,000(Rupees Six Crores Only) in favor of GHP is in the light of the
facts and circumstances of the case:

A. Loss of public money: Failure of CLCPL to complete the construction on time resulted
in humungous losses to the public money as the hospital was supposed to be for the
benefit of the public as it would have provided high quality treatment at highly subsidized
rates and therefore be a boon to the healthcare sector. It would also have provided 300
MBBS seats which in turn would have done greater public benefit as the graduates of the
college would have to compulsory serve there for a period of five years, therefore
providing good quality doctors for the benefit of the people. Firstly CLCPL was able to
complete only 70% of the construction work and even asked for the amount which was
due after the handing over of the hospital. Section 73 of the Indian Contract Act (ICA)
says Compensation for loss or damage caused by breach of contract – When a contract
has been broken, the party who suffered by such breach is entitled to receive, from the
party who has broken the contract, compensation for any loss or damage caused to him
thereby, which naturally arose in the usual course of things from such breach, or which
the parties knew, when they made the contract, to be likely to result from the breach of it.
Here CLCPL broke the contract when they did not complete the project on time since
time was an essence of the contract and according to Jagdish Singh V. Natthu Singh 12 –
Compensation can be awarded where the contract becomes incapable of specific
performance without any fault of the plaintiff, (here the GHP) and the compensation
must be decided on the basis of Section 73 of the ICA. The Government here suffered
huge amount of losses of public money due the unprofessional behavior of the CLCPL
and therefore experiencing a direct loss and are therefore entitled to get compensation for
the loss. In the landmark case of Hadley v. Baxendale13 it was held that a party injured by
a breach of contract can recover those damages that either should reasonably be
considered as arising naturally, i.e., according to the usual course of things from the
breach, or might reasonably be supposed to have been in the contemplation of both
parties, at the time they made the contract, as the probable result of the breach of it,
12
Jagdish Singh v Natthu Singh [1992] AIR 1604.
13
Hadley v Baxendale [1854] 9 Exch 341.

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thereby, covering both aspects of direct and consequential damages. The loss of GHP due
to such late and incomplete construction of the SSHMC can be very reasonably
considered as arising out naturally. They are entitled to receive INR 1,60,00,000(Rupees
One Crore Sixty Lakh Only ) because CLCPL did not complete its promised work
therefore are entitled to repay the Government. Further according to Clause 12(B) of the
contract the GHP is entitled to receive INR 25,00,000(Rupees 25,00,000) every three
months and therefore keeping at what pace the work was being done at band therefore
keeping at what pace the work was being done at by the CLCPL it seems quite clear that
the GHP is entitled to receive 2,00,00,000 as a late penalty fees. Though the loss of
MBBS seats might not seem to be a direct loss but if we keep public benefit in mind and
what these 300 MBBS seats would have provided for the public and how much will the
public loose if these seats are not made available for 2 years it brings a direct conclusion
that CLCPL is responsible for the loss of public and should be compelled to pay Rupees
2,00,00,000 to the government. Related to indirect losses we must take into
consideration the findings of Victoria Laundry (Windsor) Ltd v. Newman Industries
Ltd14 which states If a party can establish that under any special circumstances (which
are outside the ordinary course of things) resulting in such losses the other party to the
contract was aware of the losses suffered due to the actions or inactions of such party, the
latter shall be liable for such losses, even if such losses do not occur in the normal course
of events. Most important thing that should be kept in mind is the benefit of the public.
The only reason the government gave the contract to CLCPL because it expected CLCPL
to deliver on its promises and construct the SSHMC in the decided time. Even though the
company was given three more extensions of deadlines, 18 months more than required
and even so they were not able to complete it on time. Keeping the above factors in mind
they must be compelled to pay compensation to the GHP for incurring it.
B. Time was an essence of the contract: when it was decided by both the parties that
SSHMC should be handed over to the GHP on June 15,2015 it was then only decided by
both the parties that time is the essence of contract. Time is the essence is specified
in Section 55 of The Indian Contract Act, 1872, “When a party to a contract promises to
do a certain thing at or before a specified time, or certain things at or before specified

14
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528.

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times, and fails to do any such thing at or before the specified time, the contract, or so
much of it as has not been performed, becomes voidable at the option of the promisee, if
the intention of the parties was that time should be of the essence of the contract.”
Intention of parties to contract is imperative to signify whether time is the essence or not
to a contract, therefore, as also held by the Supreme Court of India in M/S Citadel Fine
Pharmaceuticals V. M/S Ramaniyam Real Estates Pvt. Ltd. and Ors.15 (2011) 9 SCC
147, “the stipulation as time being of the essence of the contract was specifically
mentioned in clause 10 and the consequences of non-completion are mentioned in clause
9. So, from the express terms of the contract and the commercial nature of the transaction
and the surrounding circumstances make it clear that the parties intended time in this case
was intended to be of the essence of the contract.” Here in sub clause (2) of clause 12
expressly says that any delay would entitle GHP to claim damages from CLCPL and
therefore the intention is clear that both parties wanted that time should be an essence of
the contract. In General Manager, Northern Railway and another v. Sarvesh Chopra16 it
was held that a failure to perform by the stipulated time will entitle the innocent party to
(a) terminate performance of the contract and thereby put an end to all the primary
obligations of both parties remaining unperformed; and (b) claim damages from the
contract-breaker on the basis that he has committed a fundamental breach of the contract
('a breach going to the root of the contract') depriving the innocent party of the benefit of
the contract . The innocent party here is GHP and it is entitled to receive compensation
from CLCPL. Even if it was not expressly stated in the contract that time should an
essence of contract according to China Cotton Exporters v. Beharilal Ramcharan Cotton
Mills Ltd17 that in commercial contracts time is ordinarily of the essence of the contract
and when we read the clauses of the contract stating that CLCPL will have to pay fine for
every three months of delivery, it clearly mean that it was the intention of GP to enter
into a contract in which time was an essence.

15
MS Citadel Fine Pharmaceuticals v MS Ramaniyam Real Estates Pvt Ltd and Ors [2011] 9 SCC 147.
16
General Manager Northern Railway and another v Sarvesh Chopra [2002] 4 SCC 45.
17
China Cotton Exporters v Beharilal Ramcharan Cotton Mills Ltd AIR 1961 SC 1295.

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4. The action of GHP of blacklisting CLCPL from further government works is

valid under law

It is up to the authority inviting tenders to blacklist a person or company. Erusian Equipment &
Chemicals Ltd. V. State of West Bengal and ors18. held the following blacklisting simply
signifies a business decision by which the party affected by the breach decides not to enter into
any contractual relationship with the party committing the breach. Blacklisting has the effect of
preventing a person from the privilege and advantage of entering into lawful relationship with
the Government for purposes of gains. The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to have an objective satisfaction. The State
Government further submitted that the rights granted under Articles 14, 19 and 21 of the
Constitution cannot be used to compel the Government to negotiate or enter into a contract and
the Government was free to contract with companies in whom it had “trust for integrity”. Just
because it is case of government does not mean the Government should enter into a contract with
someone it does not want to even if it is for the future. The government has to be careful while
entering into a contract with a particular company and if for safety of the public money it has to
blacklist a company who did waste a huge amount of public money, it should do so. In the case
of Haldia Bulk Terminal Private limited vs. Board of Trustees for the Port of Kolkata 19, it was
held that the authority of the State to blacklist a person is a necessary concomitant to the
executive power of the State to carry on the trade or the business and making of contracts for any
purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon
the exercise of such an authority is that the State is to act fairly and rationally without in any way
being arbitrary. In Kulja Industries Limited V. Chief Gen. Manager W.T. Proj. BSNL and Ors20
the Supreme Court of India ruled on the power of an authority to blacklist a company on the
basis of the terms of the underlying contract. One of the important aspect that emerges from the
Ruling is that the Supreme Court has held that the power of blacklisting is an inherent power and
does not require express conferment by a provision of a law or otherwise. Therefore, based on
the Ruling, it would not be possible to challenge an action of blacklisting on the ground that
there is no power to blacklist. This is contrary to the general principle of exercise of powers

18
Erusian Equipment & Chemicals Ltd v State of West Bengal and ors [1975] AIR 266.
19
Haldia Bulk Terminal Private limited v Board of Trustees for the Port of Kolkata 2014 SCC OnLine Cal 17695.
20
Kulja Industries Limited v Chief Gen Manager W T Proj BSNL and Ors AIR 1994 SC 1277.

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(under administrative law) that for exercise of any power, it has to be expressly conferred,
particularly where exercise of such powers have an adverse effect on a party. There is no doubt
that CLCPL did not complete the given project and thus created a lot of pressure on the public
exchequer. A huge amount of money was spent in vain by the GHP as CLCPL could complete
only 70% of the work whereas another company Suresh Yadav and Sons Construction Private
Ltd. completed the work only in less than 3 months. If we look at the ratio at which the work was
done, there is no doubt that CLCPL showed lack of professionalism and a huge amount of loss to
the public money and also delaying improvement of health care system in the state of
Nawabdwip. Public benefit is supreme and blacklisting CLCPL will only save the government
from entering into a contract with unprofessional company like CLCPL and thus saving public
money. C. K. Achuthan V. The State of Kerala And Others21 stated that blacklisting is just
another way in which a government would not enter into a contract with a particular company. A
contract which is held from Government stands on no different footing from a contract held
from a private party and when one person is chosen rather than another the aggrieved party
cannot claim the protection of Article 14. State of Assam V. Tulsi Singh22 reiterated the same
thing that the Government like a private person is free to choose any person with whom to deal
with or transact business and no citizen has a fundamental right to carry on business in
properties, privileges or rights of Government, that an order blacklisting a party is an
administrative order and its effect was merely to refuse to such a party the prospects of doing
business with Government which did not affect any right or interest of such a party and even if
such a refusal carried any stigma, it does not amount to a punishment and that as there is no
adjudication of any rights of such a party, no question of principles of natural justice arises. The
arguments stated also rely on The Union of India (UOI) V. A.K. Mathiborwala23 which also held
that Government has the soul right to enter or not enter into a contract with someone and by
blacklisting a company the government uses its right not to enter into a contract with a
company. One of the findings of Khujla case (supra) was also taken into account in the case of
Avinash Em Projects Pvt. Ltd. V. Gail (India) Ltd24. that the object of blacklisting is often used
as an effective method of disciplining deviant suppliers/contractors. The object of blacklisting is

21
CK Achuthan v The State of Kerala And Others [1959] AIR 490.
22
State of Assam v Tulsi Singh [1994] 6 SCC 651.
23
The Union of India (UOI) v A.K. Mathiborwala [1974] 76 BOMLR 659.
24
Avinash Em Projects Pvt Ltd v Gail (India) Ltd 2014 SCC OnLine Del 2357.

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Memorial for the Respondent

not to commercially eliminate the contractor but to impose a punitive measure commensurate
with his actions. Keeping the wastage of public funds by CLCPL it is just to blacklist CLCPL
from future contracts of the government.

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Memorial for the Respondent

Prayer
In light of the issues raised, arguments advanced and authorities cited, the counsel for the
Petitioner humbly prays that the Hon’ble Court be pleased to adjudge, hold and declare
that
In the case of
1) MIPL V. GHP: That the decision of GHP in not awarding the contract to MIPL is correct
and valid in nature.
2) CLCPL V. GHP:
A. That the district court of Nawabdwip had the jurisdiction of hearing the case.
B. Awarding INR 6,00,00,000 to GHP as a compensation from CLCPL is in light of the
facts of the situation.
C. Blacklisting CLCPL is justified and valid under law.
And may pass any order it may deem fit in the interest of Equality, Justice and Good Conscious.
SD/-
(Counsel for the Respondent)

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